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East End of Long Island Short Sale Guide

January 4th, 2009 category: East End LI Foreclosures, Real Estate News

Going into 2009, the following are some scenarios that may be encountered by both buyers of homes on the East End of Long Island, and sellers of homes on the East End of Long Island.

If you’re a homeowner seeking to sell your home via a short sale (if your loan amount exceeds the current market value, and you MUST move), the following are some things that you’ll be expected to provide to your bank in order to get approval for this action:

1. Considered by some the most difficult: a HARDSHIP LETTER . In this communication, you’ll provide to the lender the exact nature of your situation, accompanied with facts to demonstrate an inability to make payments. Sign and date it.

2. A financial statement, detailing your current state of affairs (including, but not limited to, all income generated; all savings account balances; any assets). Sign and date it.

3. A broker price opinion, generated by your listing agent, demonstrating the comparable properties that have sold in your area recently.

4. Last years tax returns or 1040/W-2’s.

5. Your most recent pay stubs

6. All listing activity, provided by your listing agent, showing price adjustments through the course of the listing period.

**SEEK LEGAL COUNSEL FOR ALL RECOMMENDATIONS. THIS IS STRICTLY A HEADS UP- it is very important to have legal guidance for any distressed property scenario, as can only be provided by a lawyer.**

If you’re a buyer interested in making an offer below the total amount owed by a seller, be prepared to offer a qualification letter generated by your bank, with proof of funds, to be submitted with your offer. In order for a bank to view an offer as viable, providing this proof is a non-negotiable requirement expected by most banks. Start early, by visiting a lender BEFORE you look- scrambling with the possibility of other offers could well create a lost attempt to purchase.

Another way ”out” for distressed sellers with one mortgage, no second mortgages, is a deed in-lieu-of foreclosure. One advantage to a deed in lieu of foreclosure is, among other things, a better likelihood that a deficiency judgement on the part of the bank will be reduced or waived, although this is not always the case. Your attorney needs to review all avenues with you, in order to provide you with the legal ramifications of any action that you might take to resolve a situation that is creating HUGE stress. The sample deed in lieu of link is from HUD; check with your bank to see if this is an option for you.

BANKS DON’T WANT PROPERTIES BACK, and both short sales and deed in lieu of foreclosures avoid the cost of a subsequent foreclosure process for the lender, so may well benefit both sellers, banks, and buyers.

Understanding up front requirements when dealing with your lender, or purchasing a short sale, will minimize the frustration that often accompanies any decision in the sale or purchase of a distressed property. There’s a reason for the difficulty- you are most definitely not alone. Loss mitigation departments are swamped, dealing with many, many sellers and buyers undergoing the same challenge.

3 Responses to “East End of Long Island Short Sale Guide”

Banks Don't Want it Back | 24/7 REO Realty Says:
January 7th, 2009 at 9:31 pm
[…] the Real McCoy though at Options Realty. “Going into 2009, the following are some scenarios that may be encountered by both buyers of […]
Heartburn Home Remedy Says:
April 15th, 2009 at 7:47 am
The style of writing is quite familiar to me. Have you written guest posts for other blogs?
laurie mindnich Says:
April 15th, 2009 at 8:08 am
Heartburn,
No, but I have seen some of our “stuff” appear elsewhere, without credit. The perils of blogging (and cut and paste).